Arne Swabeck

The British Scene

England’s Economic Plight

(July 1931)

In the International of Labor, The Militant, Vol. IV No. 14, 11 July 1931, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The decline of the British empire has almost become proverbial. The last part of the nineteenth century already witnessed the rise of the threat to its domination. Germany, then the most active competitor, began crowding England in the world market. But it is since the world war, and the establishment of the United States as a world dominant creditor nation, that the decline has become more accelerated. This is perhaps not so much demonstrated in actual figures of lost ground as in the import of their comparison with general world market conditions, and above all in the political import of this factor.

England did not experience since the war, an intervening “prosperity” period as did the United States from 1924 to 1929, as did France, not even such a temporary upward swing as took place in Germany. Since the world war she has been saddled with an enormous indebtedness to the United States. It would be difficult to calculate the total amount, but payments of the purely governmental debts to U.S. for the proposed moratorium year alone would amount to $159,520,000 according to the New York Times estimate. After a desperate struggle, England did succeed in re-establishing her gold standard but is now quite alarmed at the protracted heavy flow of gold to the U.S. and France.

The decline has become reflected within the country, that is, aside from the differentiation of interests within the dominion empire, in a steadily mounting unemployment; in a marked uncertainty within the upper class; in decline of the decadent Liberal party and new divisions within the political parties in general both capitalist and labor; in a diminution of the formerly powerful aristocracy of labor as well as in sharpened class antagonisms.

“Gradualness” some time ago became the sacred gospel of Baldwin and MacDonald alike. As far as its object is concerned there have been no fundamental differences discernible, all possible pious protestations by MacDonald to the contrary notwithstanding. And surely England is now experiencing a gradualness of decline, with – as in all past history, so also in the future – prospects of some violent interruptions, both of war and of revolutionary upheavals.

Today the export of British goods is declining more rapidly than is international trade. Figures are very tiresome but to cite a few in demonstration will nevertheless prove illuminating. The net favorable balance, or credit to British trade and services of all kind for the year 1930 amounted to $189,000,000. Before the war, with its lower price level, the net balance was nevertheless much higher. For example, in 1913 a total of $878,000,000 and in 1907 a total of $670,000,000. How seriously England has been hit by the present world crisis is illustrated by the Board of Trade index number of industrial production. With 1924 as its base line it shows a drop from 114 in the fourth quarter of 1929 to 110.7 in the first quarter of 1930; to 103.1 in the second quarter; to 99.5 in the third quarter. The yet more recent figures of the Board of Trade for the first quarter of 1931 shows a fall of imports of $368,467,665 and of exports of $339,692,555 below the corresponding period of 1930.

Growing Conflict in World Market

The competition and preparation for the conflict with the United States proceeds everywhere. In China it cannot be said that England has been most successful. It alternatingly backed the various reactionary militarist oppositions to the Nationalist government of Chiang Kai-Shek which, of course, was equally as reactionary but so far more successful. The “open door” policy of the American imperialists – because of their having less important concessions – won favor with the bourgeoisie of the Chinese Nationalist government. The success to date of its present degree of stabilization is in no small measure due to the defeat of the revolution of the Chinese workers and peasants because of the Menshevik policy by which it was conducted by the Stalin Comintern regime. However, the perspectives for political superiority of American imperialism in China are by no means secured. The Chinese revolution is still smouldering.

In South America, British imperialism is striving desperately to maintain its foothold against the American aggressor. But the immense preponderance of credits available In Wall Street presses continually for new fields of investments. Recently the air has been astir with newspaper rumors of some sort of extension of the Hoover moratorium action for “relief” of South America. However, as is admitted, it is in this sphere not a question of governmental debts and hence the purpose could possibly better be accomplished without official governmental action. And no doubt, Wall Street itself will know how to make the broadest possible application of the Monroe Doctrine with its government ready to back it up in due time. British investments in South America are still far greater than those of the American imperialism. According to Revista de Economia Argentine the figures in 1928 were $4,103,000,000 for England and $2,167,000,000 for the United States.

It is in the control of electricity and mineral properties that the greatest duel is being waged in the South American republics. When the New York Stock Exchange boom was on, many securities went from London to New York. After the slump set in some have traveled the way back. In the little revolution in Brazil, Wall Street prematurely “backed a loser” and since then the successful “revolutionists” have called to their assistance an expert of the Bank of England and not of the Federal Reserve. But such an instance can hardly yet be considered typical.

Recently the Royal Salesman made a tour of the South American republics – It will be remembered that Hoover also made a similar “good will” tour just before his inauguration. The Royal Salesman returned and had a nice little speech written up for him which he delivered to a gathering of fellow capitalists at Manchester. It laid great stress on the problem of England’s recapture of these parts of the world markets lost to the United States.

Growing Conflict at Home

British capitalism, however, is now violently torn between the two problems of struggle to maintain its world market position or turning the major attention more inwardly upon the dominion and colonial empire. Although this turn is pretty much forced by necessity, in either field its difficulties are mounting not diminishing. With this is connected also the growing conflict of protective tariff walls as against free trade. Many have been the voices recently favoring empire economic unity. Especially noteworthy the empire crusade conducted by Lord Rothermere and Beaverbrook and the break within the Conservative party on this issue. Even the General Council of the British trade unions joined with the Federation of British Industries in issuing a statement for empire economic unity at the time of the last T.U. Congress at Nottingham.

At the last imperial conference the dominion premiers came and apparently fell right into line with the economic unity idea. As a matter of fact it was hailed like their own proposals, to be connected with the most favored nations clause; but as the discussions developed further it was soon found that the dominions, having developed capitalist economic interests of their own came into even sharper collision with those of the mother country and thus the idea does not stand so well.

Multiplications of capitalist contradictions record some classic examples in England. Its age-long dominance in the world market, with a steady flow of import of raw materials and export of manufactured goods and a foundation of a colonial empire, free trade became elevated to a sacred principle. Way back, during the hard times of the Elizabethan days steps were earnestly taken for colonial expansion. The manufacture of those days was prohibited in the colonies, great tariff walls were erected with a free interchange within the empire of staple products to England and finished goods to the colonies. Came the industrial revolution in England; the world market lay at its feet and the tariff walls could be eliminated.

History is now repeating itself – and we might add – while it was the first time as a tragedy, it is the second time as a farce. A section of the capitalist class, and indeed the most powerful section, is reverting to the clamor for protection for England’s decadent industry. For the development of a young capitalist industry facing an open world market, protective tariff walls can easily become an important incentive. But matters stand entirely different in England today. For a declining empire facing a definitely divided world market, for a bankrupt system, neither the reactionaries of protectionism nor the reactionaries of free trade can furnish the solution. That can be furnished only by the program of the social revolution.